Borrowing money with a peer-to-Peer lender.
What is peer to peer lender?
It's a community lending/saving circle. An alternative way to borrow money. You borrow from individuals, who invest their money by lending it to you. This concept allows the borrowing and lending between individuals or a group of individuals, or ‘peers’, without a traditional financial institution such as a bank or building society being involved.
All this is arranged with the peer to peer company; they pair up people who want to earn a return on their money, with those who want to borrow it. There are a few peer to peer lender websites, and each should be researched fully before making a decisions -i.e, what one meets your needs best?!
Why peer to peer borrowing?
The benefits of this format, namely, the rates are very competitive and you can pay it off early without having to worry about additional charges. The rates can look more attractive on loans, i.e. a £5,000 loan from a peer to peer lender over a three-year term comes with a rate of 6.9% APR.
So no matter what the reason for the loan, whether it be for home improvements or to buy a car, if you want to borrow money, the peer to peer lender's websites put you in touch with individuals that want to lend it to you. As such, the companies behind these services act as intermediaries between a borrower and a lender or lenders, dependent on certain factors such as your credit score.
If you apply for a loan, you will be credit checked using a credit reference agency and also have to pass the peer to peer company’s own credit tests.
So if you prefer to take a loan without the need of bank or building society, perhaps you've been turned down by one in the past, or simply the peer to peer competitive interest rates and the flexible loan terms the websites offer, then peer to peer borrowing may be an option for you.